Asian equities kicked the week off on the back foot following on from the lower close in Wall Street. The breakdown in German coalition talks also weighed on the markets as it was deemed that a fourth term in control for Merkel could be in doubt. Markets opened at their worst levels and recovered during the session but still ended up in negative territory (Nikkei -0.45%, Hang Seng -0.13%, Shanghai Comp -0.78% & S&P/ASX -0.19%). The Euro dropped 50 pips vs the US$ on the news and remained under pressure for throughout the session. The US$ and Yen were the main benefactors with the Dollar Index gaining 30 pips from Friday's close. Bond markets gained on the weaker equity scenario with TYZ7s trading 5-6 higher with a robust 92k lots changing hands. JGB's and Aussie Bonds also gained with the Aussie 10yr finishing at its highest level for 5 months. Elsewhere Bit-coin broke through the 8000 level while Oil & Gold both traded lower. Probably not a morning to be long Euro's.
Key Headlines:
-Japan Trade Data. Balance +¥285.4 Bln vs +¥330.0 Bln exp, pvs ¥667.7 Bln
Adjusted Balance +¥322.9 Bln vs +¥206.7 Bln exp, prvs ¥240.3 Bln
Imports Y/Y +18.9% vs +20.2% exp, prvs +12.1%. Exports Y/Y +14.0% vs +15.7% exp, prvs +14.1%.
-German Chancellor Merkel said she will inform President Steinmeier that they were unable to form a coalition government after FDP walks away from the table with immigration the main sticking point.
-The PBoC set the yuan mid-point at 6.6271 against the Dollar
The PBoC injected 70 Bln yuan via 7-day reverse repos; 20 Bln yuan via 14-day reverse repos; 10 Bln yuan via 63-day reverse repos.
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